Snakes! Why Did It Have to Be Snakes?
Walton “Indiana” Jones uttered this famous line in the movie Raiders of the Lost Ark released in 1981. The scene begs the question does ‘Indy’ think alligators would be better than snakes or maybe lions? Indy is asking the wrong question at the wrong time. Often the business problem that envelops our company will be misdirected by leaders asking the wrong set of questions that fail to address the root problem. The result is a bad solution that delivers the same bad results. Seasonal curves in businessare created by events that repeat on a schedule. That schedule can be the first week of every month, a season like spring, a holiday like Thanksgiving or an event like a Super Bowl. They all repeat based on a time schedule.
Most legacy inventory management software doesn’t have the math to manage seasonality correctly. While a seasonal index is just a multiplier used with a base forecast, the real issue is how to determine the base forecast and the multiplier. People review the simple math needed and fail to realize the real questions should be focused on how you are calculating the index (multiplier) and base demand forecast.
In the 15 plus years I worked in retail and later for software companies, I can say without question the two biggest opportunities for business are in managing seasonal inventories and lead time (see my last post). Today I have a brief slide share that my friend and associate Heather Palmer assembled on the 6 seasonal index mistakes you do not want to make. A translation of that title is these are the 6 mistakes we see the most often that are the easiest to fix and have significant ROI.
The reality is too many people ask the wrong questions, forget about bad results as they run to the next season’s fire drill; doomed to repeat the same mistakes and bad results over and over. Maybe this is the opportunity to stop asking the wrong question and ask yourself: Do You Make the Same Seasonal Error Seasonally?